Win court backing on S&P 500 options

CHICAGO, May 25 (Reuters) - CBOE Holdings won courtbacking Friday in its long-running legal battle to prevent rivalInternational Securities Exchange from listing options on theStandard & Poor 500 Index, one of CBOE's most popular andprofitable products.

The Illinois Appellate Court on Friday affirmed aninjunction forbidding ISE from listing S&P 500 options, whichare licensed exclusively to CBOE by McGraw-Hill and CMEGroup's index services unit, according to a statementfrom CBOE. The ruling also applies to options on the Dow JonesIndustrial Average.

The dispute between ISE and CBOE stretches back more thansix years, when ISE - at the time a brand-new electronicexchange -- tried topple the older floor-based exchange bylisting S&P 500 Index options, known as "SPX," on itsall-electronic platform.

ISE executives argued that it was unfair CBOE kept thelucrative index options to itself, while options on stocks arefree to be traded at any U.S. stock-options exchange. ISE staffregularly passed out "Free the SPX" buttons at optionsconferences.

CBOE executives meanwhile said their licenses gave them theexclusive right to list the products, and they intended todefend that right.

In 2006, after several attempts to buy licenses from McGrawHill and Dow Jones, ISE announced a plan to list theindex options without licenses. CBOE and McGraw-Hill sued toblock it, a suit that Dow Jones & Co later joined, and in 2010an Illinois judge issued a permanent injunction against ISE.

On Friday, CBOE Chief Executive William Brodsky said hewelcomed the affirmation of that prior ruling.

"No third party should be able to interfere with contractuallicensing agreements," CBOE Chairman and CEO William Brodskysaid in a statement. "Nor should any exchange have a free rideon the enormous investment CBOE made in creating options onthese indexes and in developing and marketing them for over twodecades."

Since the original case was filed, ISE was bought by Eurex,a Frankfurt-based futures exchange co-owned by Deutsche BoerseAG. CME now owns the majority of Dow Jones Indexes,and has a joint venture agreement with McGraw-Hill.

"We will evaluate all of the options to determine next stepsbut have no additional comment at this time," an ISE spokeswomansaid.